Apple's New Macs Patch One Weak Spot, Not Another

Apple's (AAPL) new Macs, announced this morning, could rejuvenate one of the company's major weak spots -- its desktop Mac business. But today's announcements don't do anything for Apple in the PC industry's biggest growth market -- netbooks, or mini notebook computers -- an area where Apple will need to focus some attention this year.

Of today's announcements, the iMac value shift -- the $1,499 model now comes with a 30% bigger screen (24-inch), and twice the memory and storage -- could help in particular. And Apple should see pent-up demand for Mac minis -- which hadn't seen a speed bump in a year and a half -- turn into sales, even if just to geeks and home theater enthusiasts looking for a new Web video machine.

The biggest problems are the recession and the fact that people have rapidly slowed their computer purchases. Research firm Gartner expects PC sales to drop 12% this year, its sharpest drop in history.

But Apple is also missing out on a major growth area in the PC industry -- the mini-notebook, or netbook market. Gartner expects netbooks to represent the majority of the PC industry's growth this year, growing 80% year-over-year to 21 million units.

We expect Apple to enter this market by the end of this year with an ultra-portable, multi-touch screen tablet computer, perhaps an extention of the iPod touch line. While we don't expect Apple to compete in the budget netbook market -- as low as $400 -- we think an "iPod touch HD" could do nicely in the high end of the market, where Apple typically plays.

Meanwhile, with no major price cuts or design updates, the new iMacs, Mac minis, and Mac Pros don't scream "buy me!" in a terrible spending environment. And it's too late for them to make much of a mark on this quarter's Mac sales, which are already looking lousy.

But they could help a little, especially in the June quarter. Which should gradually help Apple's desktop Mac business -- whose unit shipments fell 25% year-over-year during the December quarter, while Mac laptop unit shipments increased 34% year-over-year -- improve its performance.